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How to prevent a chargeback in holiday rental

Chargebacks are the exception to the rule and not the norm, but are unfortunately on the increase in holiday rental.

It can be frustrating when one dedicates one’s time, efforts and resources to offer the best service possible, only to find after the stay that the payment made by the guest to the agency has been reimbursed to the guests: in the agency’s opinion, unjustifiable or fraudulently.

A chargeback occurs when a cardholder orders their bank to reject/reclaim a payment previously realised. Chargebacks in the holiday lettings sector can occur because the client considers that they have not obtained the service they contracted, or for the simple fact of bad faith or fraud.

By an unsatisfied customer
By an act of fraud or bad faith

How to avoid chargebacks with dissatisfied customers?

To avoid this first scenario, we should ensure that the image we sell of our properties and services exceeds expectation. If we do not achieve that, the key to reversing these types of chargebacks is having all the services which we and the property offer well-detailed. Having such images and documentation which shows the high quality of our services and their correct state can help us demonstrate to the banking entities that in such cases, the client is not correct.

chargeback alternatives for vacation rental
The key to reversing these types of chargebacks is having all the services which we and the property offer well-detailed

4 Ways to prevent a fraudulent Chargeback

Avoiding a fraudulent chargeback is more complicated, but not impossible.

The majority of fraudulent chargebacks in the holiday rental sector come from bookings made with a falsified card. They tend to be of a higher amount, made at the last minute, for a stay below 30 days.

To avoid this type of chargeback, it is advisable to follow these measures:

Use a 3D secure platform in your own website which allows a verification of the cardholder through an SMS or PIN.
Always check that the name of the cardholder the on the card coincides with that of the lead guest of the booking. If that is not the case, and a family member or friend has paid, ask the cardholder to agree to put the agree to put the booking in their name.
Ask the lead guest to sign the check-in and invoice for the booking / services, signing their agreement and acceptance of the payment.
Obtain, via the available method, a copy of the ID of the client (driver’s license or Passport)

All of the measures could be considered barriers to conversion. However, they are measures which the tourist will accept in the majority of cases. Usually, only those who have had untoward intentions would refuse such reasonable requests.

Following these 4 measures we can avoid the client paying with another person’s card, without that 2nd party not truly relating to the stay. Even if the fraudulent party gets away with it, bank cards usually have an insurance which in many cases covers charges made with stolen cards.

Avoid repeat offenders using the VRMS

To help avoid repeat offenders in fraudulent chargebacks, the VRMS allows you inside the Customer profile to select a “Customer Category” as “Disruptive” or “Excluded”, and notes can be made inside the profile. If you’ve had such problems with a guest, these records can be kept and used to prevent any repeat.

Whilst they may require additional effort, following the above measures will pay dividends in the long-term to avoid such negative experiences. Here at Avantio we continue to work to reduce the likelihood of this happening, and plan to roll out several new functionalities which will reduce the likelihood of such instances – watch this space!

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